NERC to cancel KAEDCO’s licence over N51bn underpayment
The Nigerian Electricity Regulatory Commission (NERC) has expressed its intention to cancel Kaduna Electricity Distribution Company, KAEDCO’s licence after 60 days over N51 billion energy underpayment, among others.
Dafe Akpeneye, the Commissioner, Legal, Licencing and Compliance, in a published notice tagged NERC/LC/023, dated 15th May 2023, said, “Take note that KAEDCO is hereby given 60 days from the date of this notice to “show cause” why the electricity distribution licence should not be cancelled in accordance with Section 74 of EPSRA.”
The report noted that KAEDCO only paid 13.85% of its minimum payment obligation to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (MO) with a N4.33 billion average monthly underpayment, reaching about N51.96 billion, according to NERC performance review for 2022.
The report also stated that KAEDCO under-collected its revenues to the tune of N88.75 billion as market shortfall, capital investment allowance (N25.33 billion) and allowed operating expenses (N11.46 billion) during the period.
It explained that after KAEDCO failed to provide a credible plan for the financial sustainability of the utility, it issued a notice of imminent regulatory intervention in March 23, 2023, to the core investors – Africa Export Import Bank, Fidelity Bank Plc and Bureau of Public Enterprises (BPE) with 14 days to present their plan following which NERC highlighted several regulatory interventions for the DisCo.
In April, according to the report, KAEDCO’s investors sought more time from NERC without commitment to pay for energy remittance defaults, stressing that NERC with the investors on 14 April, 2023, discussed their final plan proposals and how to reduce their debts by N1 billion in one year with a N2 billion stabilisation loan to cut the DisCo’s N4.3 billion shortfall by N250 million immediately, among others.
The report explained that the firm then submitted the proposed plan by 17th April, pointing out that NERC said it reviewed the plan and it failed to meet the obligations and moves to cancel the DisCo’s licence.
